WCC Exam 2

Theory and state-corporate crime

Abuse of Power

occurs when the state assumes and exercises power it ought not to have; overstepping

Corruption

involves the misuse of political office for material advantage, or acts undertaken for political advantage

* standards for defining it vary
* ex: bribery

Criminal State

when some form of state criminality becomes a dominant force in the operation of the state

* any state successfully labeled as such by one or more other states that are either victorious over it or have the political

power to impose such a label

War Crimes

uncalled-for aggression and crimes against peace

* examples include the use of poisonous gases, biological and chemical weapons, nuclear weapons, etc.

Vietnam

Billions of pounds of bombs were dropped on Vietnam, and millions of Vietnamese were killed, wounded, orphaned, or up- rooted by the war. Many U.S. soldiers were also injured and killed.

* illegal because Congress never declared war (required by the constitution).
* unclear if there were any positives to going to war with Vietnam
* no official has been required to defend the decision to pursue Vietnam

Genocide (aka Ethnic Cleansing)

mass killing directed at some identifiable group of people

Holocaust

most dramatic, fully documented, and extreme case of genocide

ever. About 6 million Jews died

* the nuremberg trials were held for the surviving Nazi leadership after all those deaths
* there was question of whether the Nazi leaders could be tried by the Allies when no fully recognized international criminal law existed

International Criminal Court

jurisdiction to adjudicate allegations (against individuals, not nations) of war crimes, genocide, and crimes against humanity

* established in July 2002

Repressive State

does not go so far as waging a formal campaign of genocide, but it systematically deprives its citizens of fundamental human rights

Corrupt State

a government used as an instrument to enrich its leadership

\-ex: using gov. money for personal purposes instead of for the public

State Negligence

a situation in which “crimes of omission” are committed

* the state fails to prevent loss of human life, suffering, and deprivation that are in its power to prevent

Malfeasance

doing something you are prohibited from doing

Nonfeasance

failing to do something you are required to do

Misfeasance

performing a permissible act in an improper manner

State-Organized Crimes

acts defined by law as criminal and committed by state officials in pursuit of their job as representatives of the state

Watergate Crimes

two primary aspects: a break-in and burglary in June 1972 and the broad range of abuses of power by the Nixon administration including illegal surveillance, dirty tricks, cover-ups, and enemies’ lists

* focused on maintaining power and punishing political enemies

Iran-Contra

arms sold to Iran, proceeds used to fund contras (Nicaraguan rebels) to encourage release of hostages in Lebanon

CIA

established after World War II to prevent another Pearl Harbor, a surprise attack on U.S. territory, and in response to the emerging “Cold War”

* periodically violated its own charter

COINTELPRO

the umbrella name for various counterintelligence programs

* the FBI had engaged in extralegal and illegal disruption and destabilization of dissident political groups through this

Hoover

appointed FBI director at a time when the small government agency was plagued by corruption charges.

* skillful in promoting a favorable public image of the agency
* maintained secret files on govn. officials, probably as part of blackmail

Police Crime

can be a form of state-organized crime involving the abuse of power or occupational crime, primarily corruption

* ex: police brutality, testilying (testimonial lies)

Political System Corruption

a small power elite controls decision making and the general population is largely indoctrinated with the “official line”

Political Action Committees (PACs)

can be created by any interest group, but wealthy people use them to funnel large amounts of money to political candidates.

* used for legalized bribery so that it gives individuals a huge advantage, and can actually impact legislatures’ votes.
* worse after Citizens v. United released restrictions on spending for political elections

1789 Tammany Hall

were pretty obvious about their corruption, to a point where their greed got them prosecuted due to public outrage

* Reached its apex under Tweed’s leadership, and he was eventually convicted of 204 criminal accounts. He died in prison.

Credit Mobilier

a holding company organized in 1864 to coordinate the westward expansion of the Union Pacific railroad

* Shares in the company were made available to many congressmen at nominal cost (or given as gifts) and Congress schemed to greatly enrich the shareholders.
* no congressmen criminally prosecuted

Junketing

taking trips to exotic locations at the taxpayers’ expense, often on the superficial pretext of making a legislative study

Double Billing

in which both a private corporation and the government are billed for the same item

Kinds of Legislative Crime

* junketing
* double billing
* franking (free mailing)
* using official congressional staff for purely political or personal purpose
* conflict-of-interest offenses

Judicial Branch

judges have been charged with crimes including bribery, extortion, obstructing justice, income tax evasion, embezzlement, fraud, and abuse of authority.

* least tainted of the three branches by corruption

State-Corporate Crimes

illegal or socially injurious actions that occur when one or more institutions of political governance pursue a goal in direct cooperation with one or more institutions of economic production and distribution

Exxon Valdez

millions of gallons of oil spilled from the Valdez ship

* coast guard and pipe company also involved
* the captain of the ship had the bare minimum credentials
* there was no real hierarchy of command(s) involved

Fire in Hamlet

An explosion of a hydraulic line at Imperial Food Products led to a fire during which people could not leave.

* emergency doors were locked for fear that employees would steal chicken nuggets
* 25 people dead and 56 injured

Space Shuttle Challenger

The explosion of a spaceship that led to 7 deaths

* factors include political pressure (quality overlooked for budget), attempted nothings (pretended to fix O-rings), fatal flaw (O-rings not working), risk v. reward (NASA bullied MTI into launching)
* O-rings were proven to be worse during cold weather

Nazi Germany (Ordinary Business)

Nazis basically made prisoners of war work

* there were forced labor camps in Ford and Kodak
* Chase Manhatan seized funds and never returned them
* motivations for mass killings was because they wanted to climb the ladder

ValuJet Flight 592

A ValuJet crashed

* This was a company known for being cheap
* they had purchased three planes, two of which needed new oxygen generators
* weather was not a factor and staff was trained properly
* they didn’t have fire/smoke equipment

World Bank

characterized as paternalistic, secretive, and counterproductive in terms of its claimed goals of improving people’s lives.

* has been charged with
* complicity in policies with genocidal consequences
* exacerbating ethnic conflict
* increasing the gap between rich and poor
* fostering immense ecological and environmental damage
* neglecting agriculture so crucial to survival in developing countries
* the callous displacement of vast numbers of indigenous people in these countries from their original homes

NGOs (non-govermental organizations)

organization independent from the government

* part of the reason ordinary people lose their power over their economic destiny

Finance Crime

large-scale illegality that occurs in the world of finance and financial institutions.

Banking/Thrift

Banks are supposed to be trustful, but they do commit fraud.

* they take money from customers through interest, and they use bank statements that are hard to understand

Money Laundering

the criminal practice of taking ill-gotten gains and moving them through a sequence of bank accounts, so they look like legitimate profits from legal businesses

S and L Fraud (Savings and Loans)

a type of fraud that is hard to tell when it is fraud v. bad business judgement

* there isn’t enough regulation
* most convicted people were minor players
* very few people actually robbed a bank

1982 Garn–St. Germain Act,

raised the federal deposit guarantee from $40,000 to $100,000 and allowed the S & Ls to offer much more competitive rates, attract huge “brokered” packages of deposits, and make a broad range of investments and loans, including unsecured commercial loans

Unlawful Risk Taking

exceeding the practices legally available to the S & Ls, even in the deregulated 1980s

* Huge loans were made to developers engaged in highly speculative projects; the borrowers did not necessarily put any of their own money into these projects, and they did not even pay the origination fees
* If the projects succeeded, investors stood to make a lot of money; if they failed, the developers simply defaulted on the loan, and the taxpayers paid the price

Collective Embezzlement

As deposits began to pour into the S & Ls in huge amounts, executives and directors began to siphon off an extravagant percentage of this money for themselves

* they used the money for personal affairs, like private jets

Resolution Trust Corporation

a massive property-management company, cleaning up what was, at the time, the largest collapse of U.S. financial institutions since the Great Depression.

Insider Trading

trading material non-public information

Michael Milken

recognized that vast amounts of money could be raised through issuing and selling high-yield, high-risk junk bonds.

* successful in developing and selling such bonds and in advising companies seeking to expand or to take over other companies
* considered the junk bond king
* pled guilty to 6 charges of securities fraud and securities

Junk Bonds

high risk, high payoff, offered by companies seeking to raise money, high default rates

Derivatives

financial product derived from an underlying entity

* a contract between two parties which derives its value/price from an underlying asset
* ex: (forwards futures) contracts between two parties to buy or to sell an asset at a specified future time at a price agreed upon today

Financial Markets

Crime includes

* a massive check-kiting scheme against banks, masterminded by the prestigious brokerage firm
* systemic cheating of customers by Chicago commodities traders
* phony bidding in U.S. Treasury bonds by the celebrated Salomon Brothers investment bank
* a long-running fraud within a rigged foreign currency marketplace
* the sale of illegal tax shelters by a major accounting firm, KPMG
* the revelation of significant fraud in the mutual fund and hedge fund industries

Stock Advisors

often function as sales reps- promoting a company’s stock instead of as impartial analysts

* Could be rewarded/bonuses
* May own stock in companies they promote

Churning

excessive trading in accounts to increase brokerage (buying or selling assets for clients) commissions

Insurance Industry Fraud

Insurance companies are largely unregulated

* The financial misrepresentations and manipulations of insurance companies, while enriching their top executives, put the interests of their clientele in jeopardy

Biogenetic Explanation of Crime

criminals are inherently different from other people, even down to their appearance

Atavism

criminals are evolutionary throwbacks who are inferior to non criminals

Phrenology

the detailed study of the shape and size of the cranium as a supposed indication of character and mental abilities.

Psychological Explanations of Crime

the focus is on personality, mental processes, the enduring effects of early childhood traumas, etc.

* Freud: crime can be viewed as a reflection of the eternal conflict between the desires of the indiv. and the needs of civilization
* Personality: corporate patterns of lawbreaking are independent of specific indiv. personalities and not all corporate divisions governed by a WCCriminal with a specific personality will engage in lawbreaking
* people with a desire to control were more likely to commit WCC

Sociogenic Explanations of Crime

focuses on alleged differences in criminal propensities among members of different social classes or groups

* Gottfredson and Hirschi (1990) suggested that varying levels of self-control leads to crimes and that low social control is more shown in lower-class individuals

Sutherland

believed WCC to be organized crime

Cressy, Braithwaite, and Fisse

* Cressey: thought corps should be distinguished from real people. They cannot learn, do not have motivations, and cannot form intent
* Braithwaite and Fisse: defended the notion that corporations can take criminal action and can be properly held responsible for such action. They possess autonomy and thus can properly be held responsible for their decisions

Organizational Criminality

offenses committed by officers of organizations on behalf of the organization

* the entire organization is seldom involved in corporate crime, and the majority of personnel do not directly participate

Crime Coercive

compel others to commit crimes

Crime Facilitative

provide conditions that promote criminal conduct

Sociological Theories of Crime

Focus on structural factors

Structural Perspective

focuses either on social conditions that account for specific forms of criminal behavior or on how the distribution of power and resources influences how crime is defined and generated

Differential Association Theory

Crime is learned from peers

* broad range of learning options generally available to the white collar offender and the complex nature of the offenses themselves
* criticisms: does not adequately account for structural origins of the illegal patterns of behavior

Rational Choice Theory

people don't randomly commit crime.

* they use a logical decision-making process and weigh the costs and benefits
* those who are better educated and better positioned in life would seem to have an advantage in considering and acting on various options.
* criticisms: may not apply when humans are confused and uncertain how to act, lack clear precedents, or be driven by emotions

Routine Activities Theory

Crime is most likely to occur with a motivated offender, attractive target, and a lack of guardianship

* the legitimate features of work roles are the key to understanding WCC because the work role provides the specific opportunity for illegal actions

Social Control Theory

people with strong bonds (attachment, commitment, involvement, and belief) to social institutions are less likely to commit crime.

* corporate executives with stronger bonds to the corporation are more likely to engage in corporate crimes on behalf of the corporation
* criticism: the assumptions—that a natural inclination toward committing crimes is broadly diffused—would seem to be at odds with Hirschi and Gottfredson’s (1989) general theory, which suggests that levels of self-control vary among indiv.s

Labelling Theory

naming someone deviant leads them to deviance

* powerful individuals and organizations are more likely than the powerless to be able to avoid being labeled as deviant
* criticism: WCCriminals who have been processed by the criminal justice system typically have more legitimate options than do conventional offenders

Neutralizations

negating blame for criminal acts through some excuse

* pertain to future or ongoing behavior
* 5 techniques:
* denial of responsibility
* denial of injury
* denial of victim
* condemnation of condemners
* appeal to higher loyalties

Rationalizations

attempting to explain or justify behavior or an attitude with logical reasons, even if these are not appropriate.

Account

justification for an action which are invoked after the behavior has occurred

Anomie/Strain Theory (Merton)

a generalized goal of material success is promoted, but the means to achieve such success legitimately are not equally distributed

* those who accept the goals of society but reject legit means are innovative

Conflict Theory (aka Marxist)

concerned with identifying how the values and interests of different groups conflict

* rejects the consensus theory notion of the social world as an organic system.
* criticism: would seem to offer little by way of explaining white collar crime and criminality, unless we recognize that the possession of power is a relative matter

Inside Job

Mortgage crisis in 2008 due to large scale deregulation, large scale greed and fraud, and the collapse of a large investment bank and the biggest insurance company that led to the stocks plummeting

CDOs (Collateralized Debt Obligations)

pooled assets consisting of mortgages, bonds etc.; a kind of derivative sold to investors

* they contain tranches which are pieces of the debt that carry various risk levels.

Credit Default Swaps

huge quantities of derivatives that acted as insurance for investors. AIG would pay them if things went sideways with their CDO, and spectators could use them to bet against CDOs that they didn’t own.

Dodd Frank Wall Street Reform and Consumer Protection Act

The act established (and sometimes extended) agencies and laws to regulate the financial system, including

* The Financial Stability Oversight Counsel- controls banks so that they don’t get too large and out of control
* Consumer Financial Protection Bureau (CFPB)- makes sure that potential borrowers understand the mortgages that they are looking into
* the Securities and Exchange Commission (SEC) makes sure that credit rating agencies are truthful
* Volcker Rule restricts banks from being too risky
* and the Whistleblower Program was empowered to give whistleblowers a portion of a litigation settlement.